Committee Activity in Review

As published in the NY Business Law Journal:

summer 2017 NY BUSINESS LAW JOURNALLEGISLATIVE AFFAIRS COMMITTEE

The Legislative Affairs Committee monitored a
variety of bills in the 2017 legislative session and circulated information for
comment within the Section. After a very active 2016 session, this year’s
legislative session was relatively quiet. The Committee participated in Section
discussions on topics of interest for possible further development, including
limited liability companies and the Uniform Voidable Transactions Act. The
Committee’s charter document was worked on in more detail to define its mission
and responsibilities more clearly. The Commit­tee continued to work closely
with NYSBA’s governmen­tal relations staff and to maintain contact with counter­part
committees in other Sections

- Mike de Freitas, Chair

winter 2016 NY BUSINESS LAW JOURNALLEGISLATIVE AFFAIRS COMMITTEE

The Legislative Affairs Committee was active during the 2016 legislative session on matters of interest to the Section. We monitored a variety of bills, circulated information for comment within the Section, and prepared memoranda in support or opposition regarding some of the bills. Among the bills we tracked were: amendments to the Non-Proﬁt Revitalization Act (“NPRA”); employee wage liens; local development corporations; shareholder remote communication; and donor disclosure by chari-table non-proﬁts. The Committee also supported the Not-for-Proﬁt Corporation Law Committee in its efforts regarding the amendments to the NPRA that passed the legislature in June and are currently awaiting the Governor’s signature.

In furtherance of the Section’s strategic plans, the Committee also prepared a charter document to more speciﬁcally describe its role and functions in the context of the existing NYSBA lobbying and legislative affairs policies and procedures.

The Committee also worked closely with NYSBA’s governmental relations staff and developed communication procedures for timely notiﬁcation of relevant legislative activity. The improved communication bore fruit early, as the Committee was able to review and respond quickly to issues raised during the 2016 legislative session.

The Committee maintained contact with counterpart committees in other Sections. Issues of common interest among the Sections have arisen, such as the employee wage lien bill and the publication of private foundation annual tax return notices.

- Michael de Freitas, Chair

summer 2016 NY BUSINESS LAW JOURNALLEGISLATIVE AFFAIRS COMMITTEE

The Legislative Affairs Committee has joined with members of the International Law Section to form a joint legislative committee to propose repeal of Section 630 of the Business Corporation Law and Subsections (c) and (d) of Section 609 of the New York Limited Liability Company Law. These laws make the ten largest shareholders of closely held corporations and the ten largest members of limited liability companies personally liable for wages. The position of the joint committee is that these laws should be repealed because:

They discourage new businesses from incorporating in New York and they act as an impediment to business and employment in the state.

They violate the bedrock principle of shareholder and member limited liability that applies through-out the United States.

They are unfair. Passive owners are liable jointly and severally and regardless of knowledge or fault.

This type of wage protection is an anachronism. Workers are protected today by veil piercing principles and by labor and bankruptcy laws that did not exist when New York ﬁrst imposed shareholder liability for wages in 1848

The matter has now been placed on the Agenda of the NYSBA Executive Committee, which would need to approve it before the NYSBA can undertake lobbying efforts to repeal Section 630. As noted above in the report of the Franchise, Distribution and Licensing Law Committee, the Legislative Affairs Committee is also in continuing discussions with the New York Attorney General’s Ofﬁce in an effort to revise the New York Franchise Sales Act.

- Thomas M. Pitegoff, Chair

WINTER 2015 NY BUSINESS LAW JOURNALLEGISLATIVE AFFAIRS COMMITTEE

The
Legislative Affairs Committee has joined with members of the International Law
Section to form a joint legislative committee to propose repeal of Section 630
of the Business Corporation Law and Subsections (c) and (d) of Section 609 of
the New York Limited Liability Company Law. These laws make the ten largest
shareholders of closely held corporations and the ten largest members of
limited liability companies personally liable for wages. The position of the
joint committee is that these laws should be repealed because:

They discourage new businesses from
incorporating in New York and they act as an impediment to business and
employment in the state.

They violate the bedrock principle of
shareholder and member limited liability that applies throughout the United
States.

They are unfair. Passive owners are liable
jointly and severally and regardless of knowledge or fault.

This type of wage protection is an
anachronism. Workers are protected today by veil-piercing principles and by
labor and bankruptcy laws that did not exist when New York first imposed
shareholder liability for wages in 1848.

The
Legislative Affairs Committee is also in continuing discussions with the New
York Attorney General’s Office in an effort to revise the New York Franchise
Sales Act.

- Thomas M. Pitegoff, Chair

SUMMER 2015 NY BUSINESS LAW JOURNALLEGISLATIVE AFFAIRS COMMITTEE

The
Legislative Affairs Committee is working on three projects. The most recent is
a response to a state legislative proposal to expand the reach of Section 630
of the Business Corporation Law. Assembly Bill 737 and Senate Bill 4476 would
extend personal liability beyond shareholders of closely held corporations formed
in New York to shareholders of closely held corporations formed in other states
for unpaid services performed in New York. At its meeting May 15, 2015, the
Executive Committee of the Business Law Section decided to oppose this
legislation, which would discourage the establishment of new businesses in New
York. The Executive Committee decided to go one step further by proposing the
repeal of BCL Section 630 in its entirety because it discourages new businesses
from incorporating in New York and violates the bedrock principle of
shareholder limited liability that applies throughout the United States.

The
Executive Committee also proposed repealing new subdivisions (c) and (d) of
Section 609 of the New York Limited Liability Company Law, which were added to
the law in December 2014 without the prior knowledge of the Executive Committee.
That change makes the ten limited liability company members with the largest
percentage ownership interest personally liable for wages and salaries of
employees. Here, too, the Executive Committee proposes maintaining the
principle of limited liability.

The
second project is a broad revision of the New York Franchise Act. Members of
the Business Law Section’s Franchise, Distribution and Licensing Law Committee
and NYSBA’s Department of Governmental Relations are in continuing discussions with
representatives of the New York Attorney General’s Office.

Third,
members of the Business Law Section’s Not- For--Profit Corporations Law
Committee are working with the Law Revision Commission, the Lawyers Alliance for
New York, the New York City Bar Association and the Nonprofit Coordinating
Committee of New York to amend the Not-for-Profit Corporation Law to correct
practical problems, oversights and inconsistencies in the Nonprofit Revitalization
Act of 2013.

- Thomas M. Pitegoff, Chair

WINTER 2014 NY BUSINESS LAW JOURNALLEGISLATIVE AFFAIRS COMMITEE

The
Legislative Affairs Committee continues to work on two active projects. The
Nonprofit Revitalization Act of 2013 became effective July 1, 2014, after a
ten-year effort by the committee. Members of the Not-for-Profit Corporation Law
Committee now plan to make recommendations to the New York Attorney General’s
Office to clarify certain points in the Act and provide guidance to the
non-profit community with respect to the Attorney General’s enforcement
policies.

Second,
Richard Rosen, David Oppenheim and I are continuing our discussions with key
staff in the Attorney General’s Office and with legislators in Albany with the intention
of introducing our proposed bill in the 2015 legislative session and hopefully seeing
it through to enactment. (See the Report of the Franchise, Distribution and
Licensing Law Committee.)

Kevin
Kerwin, Associate Director in the NYSBA’s Department of Governmental Relations,
continues to work closely with us in our dealings with the legislature and the
Attorney General’s Office. We continue to monitor bills that may affect
business in New York State and we welcome new ideas for legislative changes
from all interested members of the Business Law Section.

The
next Committee meeting was scheduled to take place January 28, 2015, at the
NYSBA’s Annual Meeting. All Section members are welcome.

--Thomas M. Pitegoff, Chair

SUMMER 2014 NY BUSINESS LAW JOURNALLEGISLATIVE AFFAIRS COMMITEE

The
Legislative Affairs Committee is proud to make two announcements. First, the
Business Law Section’s years of work on modernizing New York’s Not-for-Profit Corporation
Law has finally paid off, resulting last December in the enactment of the
Nonprofit Revitalization Act of 2013.

The
last meeting of the Legislative Affairs Committee took place on January 29,
2014, in conjunction with the NYSBA’s Annual Meeting. Frederick Attea (Partner,
Phillips Lytle LLP) participated by conference call and gave a lively
description of his years of work on the nonprofit law project for the NYSBA and
the Business Law Section. Second, in November 2013, the NYSBA announced that
the Business Law Section’s proposed revision of the New York Franchise Act had
been selected as one of the Association’s 2014 legislative priorities.

Second,
in November 2013, the NYSBA announced that the Business Law Section’s proposed
revision of the New York Franchise Act had been selected as one of the Association’s
2014 legislative priorities.

Like
the Not-for-Profit Corporation Law, the New York Franchise Act (NYFA) is
enforced by the New York State Attorney General’s Office. Mr. Attea’s
discussion at the last Committee meeting of his work on the nonprofit law
change was especially instructive for the Committee’s pending effort to
modernize the state’s franchise law.

Representatives
of the Business Law Section met March 13, 2014, with key staff in the New York
Attorney General’s Office to discuss the NYSBA’s proposed changes to the NYFA.
I attended that meeting along with Richard Rosen and David Oppenheim. The three
of us were among the five subcommittee members who drafted the franchise report
for the Business Law Section in November 2009. Kevin Kerwin, Associate Director
of Governmental Relations at NYSBA, organized and attended the meeting. The
meeting was productive, but only the first step in a long process. We plan to
follow up with the Attorney General’s Office and then to meet with state legislators.

--Thomas Pitegoff, Chair

WINTER 2013 NY BUSINESS LAW JOURNALLEGISLATIVE AFFAIRS COMMITEE

Members of
the Legislative Affairs Committee met September 17, 2013. We discussed pending
legislative initiatives and the committee’s role in commenting on proposed legislation
that affects business in New York and initiating new proposed legislation. I
suggested that the committee have a mission: to improve New York laws in ways
that reinforce New York’s stature as a center of commerce. State laws should facilitate
doing business in New York. They should not be an obstacle.

A major
project the Business Law Section undertook some years ago was to modernize the
NY Not-for-Profit Corporation Law. After years of hard work and the support of
the NYSBA, the bill proposed by the Business Law Section was approved by both houses
of the state legislature in the 2013 session, but at this writing had not yet been
signed by the Governor.

Amendment
of the New York Franchise Act is next in line. The Business Law Section
proposed amendments to this law in November of 2009. The proposal would correct
large portions of the law that have been preempted by the Federal Trade
Commission’s trade regulation rule on franchising. It would improve the
business climate in NY at no cost to taxpayers. The proposal would dramatically

eliminate
traps for the unwary. The Section is seeking to have the franchise law proposal
included among the NYSBA’s legislative priorities for 2014. Kevin Kerwin, Associate
Director of the NYSBA’s Department of Governmental Affairs, informed the
committee that the Association can lobby for a bill that has been approved by
the Association’s Executive Committee regardless of whether it is one of the
Association’s priorities. The Executive Committee of the NYSBA approved the proposal
in January 2010.

There is
plenty of room for improvement of any number New York corporations and limited
liability companies and securities offerings. The committee also supports a UCC
modernization bill initiated by the New York City Bar Association.

We
encourage participation on the Legislative Affairs Committee from members of
all other Business Law Section committees. Each committee should designate at least
one person to focus on legislative needs, consider improvements to existing
law, be prepared to respond to proposed legislation from others, and work with
our committee.

--Thomas Pitegoff, Chair

Winter 2012 NY Business Law JournalLegislative Affairs Commitee

The Legislative Affairs Committee follows bills in the New York State
legislature that are of particular interest to business lawyers. Its activities
include meetings with legislators and other interested groups, and the
submission of memoranda opposing or supporting bills. The Committee is most
active during the legislative session from April to June each year. The
Committee is currently reviewing a proposed Omnibus UCC Bill intended to bring
the State of New York’s UCC law up to date and considering whether to recommend
that the Association support its passage.

- Peter W. LaVigne, Chair

Summer 2012 NY Business Law JournalLegislative Affairs Committee

The Legislative Affairs Committee has been working with the Corporations Law
Committee, former Section Chair Paul Silverman, and the Bar Association’s
legislative staff to propose an alternative to the Senate and Assembly bills
that would require New York corporations that are public companies to permit
shareholders to participate and vote remotely by means of electronic
communications. An alternative draft bill which, among other things, would
enable but not require New York corporations to offer remote participation, was
submitted to Assemblyman Kavanagh’s office, and on February 29 we had a
conference call with Assemblyman Kavanagh to discuss his bill and our proposed
alternative. The Committee continues to monitor proposed legislation of interest
to Business Law Section members.

-- Peter W. LaVigne, Chair

Winter 2011 NY Business Law JournalLegislative Affairs
Committee

The Legislative Affairs Committee works with
other committees to promote the Business Law Section’s interests in the New York
State Legislature and in the United States Congress. It helps formulate
legislative proposals and supporting memoranda, coordinate presentation to the
proper legislators and committees, and articulate solid policy rationales for
the enactment of those initiatives. Where appropriate, the Legislative Affairs
Committee also helps set forth concerns that the Section or its constituent
committees may have in regard to legislation, helps constructively to amend
those proposals to create legislation that benefi ts all New Yorkers and, if and
when necessary, opposes legislation.

The committee’s current projects include
conveying to the New York State Legislature the practical problems arising from,
and the Corporation Law Committee’s concerns about, a proposal to impose remote
participation and electronic voting requirements on corporate shareholder
meetings, and assisting the Franchise Distribution and Licensing Law Committee
in its efforts to reform New York’s franchise statutes.

---Peter LaVigne,
Chair

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